The movement is holding steady which is likely the result of poor Australian unemployment figures posted early this morning.
Yesterday was a difficult day for the Euro. Poor German factory orders data coupled with second quarter contraction in the Italian economy left dampened demand for the single currency.
Perhaps the only saving grace was economic focus towards the UK, which posted undesirable growth within the manufacturing sector.
Conversely yesterday saw improvement in the demand for the ‘Aussie’ after the Reserve Bank of Australia (RBA) decided not to cut interest rates on Tuesday.
Early this morning Australian unemployment figures proved to be less-than-desirable, weakening the AUD against many of the majors.
The figures showed growth in unemployment from 6.0% to 6.4%, the highest it has been in 12 years.
Paul Bloxham, chief economist at HSBC, said that the numbers reflected ‘the impact of falling commodity prices, a stubbornly high Australian dollar as well as the negative reaction to the May federal budget’.
This is the first time since before the financial crisis that joblessness in Australia has surpassed that of the US. Coupled with an uninspiring employment change figure of 300 (less than the forecast increase of 13,200), ‘Aussie’ demand continues to decline.
Further complications for the Euro have arisen today after disappointing year-on-year German industrial production figures.
May’s growth in German industrial production was 1.1%. This low figure caused a reserved forecast figure of 0.3% for June of this year. The reservation was underestimated, however, as the actual posting for June was -0.5%.
Later today will see the result of the European Central Bank’s (ECB) interest rate decision. Although it has the potential to alter the current situation, economists predict that the central bank will hold the main interest rate at 0.15% which will have no real impact on the Euro’s current standing.
ECB president Draghi will be holding a press conference following the interest rate decision which may yield more important information and effect a change. The likelihood of an unchanged interest rate will disappoint some.
French President François Hollande has argued that keeping the interest rate on hold risks deflation. He went on to state; ‘The ECB must take all necessary measures to inject liquidity in the economy’.
Looking ahead to tomorrow for the EUR/AUD pairing several reports are likely to hold significance.
The Reserve Bank of Australia (RBA) Quarterly Statement on Monetary Policy may reveal some important information. Also the German Trade Balance will be one to watch. Having posted a figure of 17.8 billion for May, the forecast figure is expected to jump to 18.9 billion.
Next week’s reports concerning AUD NAB Business Confidence will have an economic impact. Similarly the German ZEW Survey for economic sentiment and the Eurozone ZEW Survey for economic sentiment will be of consequence economically.